- Most Americans would get a tax cut under the Democratic plan.
- Those earning $30,000 or less annually come out much further ahead compared to the 2017 Trump tax law.
- Lower-earning Americans are poised to get a big boost from the child tax credit if its renewed.
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Democrats are still drafting their $3.5 trillion social spending legislation, but one thing is apparent: Compared to the 2017 Republican tax law, the House Democrats' plan packs a bigger punch in its tax cuts for average Americans - particularly those earning $30,000 and under annually.
House Democrats have wrapped up efforts to turn President Joe Biden's economic priorities into a $3.5 trillion spending package to overhaul childcare, education, and healthcare. It includes tax increases for wealthy Americans and large firms. However, it does scale back some of the hikes Biden sought.
All income groups earning below $200,000 a year would see a tax cut in the plan put forward by Democrats on the House Ways and Means panel, per an analysis released Wednesday from Congress's nonpartisan scorekeeper. By contrast, the 2017 Republican tax law gave wealthier Americans a more sizable cut compared to those on lower-income households, as illustrated in the chart below.
The trend shows "a pretty stark comparison between the Ways and Means package and the 2017 tax law. That reflects pretty different priorities," Samantha Jacoby, a tax expert at the left-leaning Center on Budget and Policy Priorities, told Insider.
Most Americans pulled in $50,000 and under in 2018, according to the latest data from the IRS, and they're in line for a tax reduction. The size of the tax cuts gradually increases among lower-earning households.
"The Ways and Means package is prioritizing tax cuts for low and moderate-income people," she said, adding that much of the tax benefits of President Donald Trump's tax law skewed toward higher-earning Americans.
The analysis from the Joint Committee on Taxation found the average tax rate would climb 0.2% for those earning between $200,000 and $500,000 in the House Democratic plan. Then it would rise by 1.6% for those making between $500,000 and $1 million. After that, the tax rate shoots up 10.7% for households earning above $1 million.
The 2017 Republican tax law slashed the corporate tax rate to 21% from 35% while setting temporary benefits for individuals. The trend is reversed from the Democratic package: Income groups starting at $50,000 and above saw the size of their tax cuts increase, reflecting a GOP view that tax cuts for the rich provides a boost to the economy.
In the Democratic plan, lower-income Americans earning $20,000 and less would be among those getting the biggest tax cut - those earning between $10,000 and $20,000 would see their tax rates drop by roughly 10%. It's nearly doubled for those making below $10,000.
Jacoby said that is likely largely due to the expanded child tax credit, which delivers monthly payments to families up to $300 per child regardless of whether they owe taxes or not.
Biden leaned into how his economic plan concentrates tax benefits onto average Americans during a speech on Thursday. "My plan benefits ordinary Americans, not those at the top who don't need the help," he said from the White House. "It's a historic middle-class tax cut."